October 18, 2017

Cordray responds to Noreika's criticism of arbitration rule

Consumer Financial Protection Bureau Director Richard Cordray has written an article for The Hill entitled "The truth about the arbitration rule is it protects American consumers." In the article, Cordray responds to Acting Comptroller of the Currency Keith Noreika's opposition to the Bureau's rule banning mandatory predispute arbitration clauses in specified consumer financial product and service contracts if those clauses prevent class actions.

Cordray said Noreika had previously asserted that the Bureau's arbitration rule threatened the safety and soundness of the banking system, which Cordray described as "farfetched." Cordray then referred to a more recent claim by Noreika "that the rule will impose high costs, in the form of a 3.43 percent increase in credit card interest rates, on consumers," a claim Cordray said was "demonstrably bogus."

The CFPB has also released a letter by Cordray to Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) responding to Brown's request for a Bureau analysis of an Office of the Comptroller of the Currency review about the effects of the arbitration rule. According to Cordray, "the Consumer Bureau's Office of Research analyzed the OCC review and found that it is based on flawed statistics and is contradicted by publicly available historical data that the OCC did not consider."

In addition, the CFPB has released a brief blog post containing links to Cordray's article and letter, as well as an August op-ed in the New York Times.